Shares of Circle Internet Group (CRCL -15.37%) fell this week, down 24.9% as of market close on Friday. The slide comes as the S&P 500 (^GSPC 0.52%) and Nasdaq-100 were up 3.4% and 4.2%, respectively.The company, which went public earlier this month, is the sole issuer of USDC, one of the most popular stablecoins on the market. After an incredible post-IPO run, the company's stock retreated this week as investors grew wary of its valuation.A week of mostly positive news wasn't enoughLast week, the Senate's ...

CoreWeave (CRWV -7.63%) and Circle Internet Group (CRCL -10.69%) are two of the hottest stocks on the market right now. They're both new, and investors have been feverishly buying them up already.CoreWeave is a promising player in the artificial intelligence (AI) space, working closely with chipmaking giant Nvidia. Circle Internet Group is involved in crypto, and its stablecoin, USDC, is one of the most popular ones to use.Both stocks are benefiting from some bullish trends in their respective industries, b ...

Core Viewpoint - The potential impact of stablecoins on the demand for short-term U.S. Treasury securities is a key topic of discussion at the recent money market fund seminar in Boston, with expectations that these digital tokens will absorb a significant amount of government bond supply later this year [1][2]. Group 1: Stablecoin Market Dynamics - Currently, approximately 80% of stablecoin funds are allocated to Treasury bills or repurchase agreements, totaling around $200 billion, which accounts for less than 2% of the overall U.S. Treasury market [1]. - The rapid growth of the stablecoin market is likely to outpace the supply growth of U.S. Treasuries, creating substantial new demand for government bonds [1][2]. - As financial institutions and companies increasingly utilize stablecoins for payments, cross-border remittances, and decentralized finance, issuers must continuously increase their reserve assets to support this expansion [1]. Group 2: Market Supply and Demand - The market anticipates up to $1 trillion in new U.S. Treasury supply by the end of the year, necessitating new buyers to fill this gap, with stablecoin issuers emerging as a critical force in this regard [2]. - If the Treasury Department reduces long-term supply and shifts towards short-term financing, the demand increase from stablecoins could provide the Treasury Secretary with more policy adjustment flexibility [2]. - The total market capitalization of stablecoins currently stands at $256 billion, with projections suggesting that if the recently passed stablecoin regulatory framework becomes law, the market could exceed $2 trillion by 2028 [2]. Group 3: Future Outlook - The stablecoin market is expected to experience explosive growth over the next three to five years, potentially becoming a significant source of new demand for U.S. Treasuries [3].

Group 1 - Circle Internet Group's shares are down 9.1% following a critical report on stablecoins from the Bank for International Settlements (BIS) [1][2] - The BIS report questions the effectiveness of stablecoins, suggesting they do not meet key requirements for a stable monetary system [2][3] - Circle has a market cap of nearly $60 billion and reported sales of $1.7 billion last year, indicating significant growth expectations already priced into the stock [3] Group 2 - Circle's revenue is highly sensitive to interest rate changes, with potential impacts of up to 10% on the bottom line for each 0.25% cut in rates by the Federal Reserve [4] - Approximately 50% of Circle's revenue is dependent on Coinbase, making Circle's financial performance closely linked to Coinbase's USDC holdings [6]

Group 1: Company Overview - Circle Internet Group has seen significant stock performance, with a 290% increase since its IPO on June 5, where it priced shares at $31 and opened at $69, reaching $270 [1] - The company is known for its stablecoin USDC, which is the second-largest stablecoin by market value, and also issues EURC, both backed by fiat-denominated reserve assets [3][4] Group 2: Financial Performance - Circle's revenue increased by 59% to $579 million in the first quarter, driven by a rise in circulating USDC, despite a decrease in reserve return rates [6] - Adjusted EBITDA rose 60% to $122 million in the same period [6] Group 3: Regulatory Environment - Stablecoins are gaining traction with regulators, with the EU's MiCA framework establishing obligations for stablecoin issuers, and Circle's USDC being the only top-10 stablecoin compliant with these regulations [7][8] - The U.S. Senate approved the GENIUS Act, which aims to protect consumers and impose rules on stablecoin issuers, including full reserve backing and monthly disclosures [9] Group 4: Market Potential - The stablecoin market is projected to grow significantly, potentially reaching $2 trillion, with estimates suggesting a rise from $260 billion to $500 billion by the end of 2026 [10] - Long-term annual revenue growth for Circle is estimated at 25% to 30%, bolstered by the launch of the Circle Payments Network [11] Group 5: Valuation - Circle's revenue over the trailing 12 months totaled $1.9 billion, with a market capitalization of $57 billion, resulting in a price-to-sales multiple of 30, which is considered expensive [12] - Analyst Jeff Cantwell has set a target price of $235 per share, indicating a potential downside from the current price of $270 [13]

Core Insights - The global stablecoin market has surpassed $250 billion, accounting for 7.48% of the $3.35 trillion cryptocurrency market, with a compound annual growth rate (CAGR) exceeding 80% over the past five years, establishing a duopoly between USDT and USDC, which together hold 84% of the market share [1][17][29] - Circle, as the issuer of USDC, is set to go public on June 5, 2025, on the NYSE, with its stock price increasing over 675% within ten days of listing. Its business model primarily relies on interest income from reserve assets, which constitutes over 99% of its total revenue [1][4][31] - The passage of the GENIUS Act in the U.S. provides a regulatory framework for the stablecoin market, focusing on issuer qualifications, reserve requirements, compliance, and consumer protection, aiming to foster innovation while maintaining financial stability [1][11][12] Stablecoin Market Dynamics - The stablecoin market is characterized by a dual oligopoly, with USDT holding 60% and USDC holding 24% of the market share. USDC is backed by U.S. Treasury bonds and a 1:1 reserve of U.S. dollars, emphasizing compliance and transparency [1][17][29] - Circle's partnership with Coinbase is strategic, with Circle projected to pay Coinbase $900 million in distribution fees in 2024, representing 54% of its total revenue. This collaboration enhances USDC's integration into Coinbase's ecosystem, increasing its share of USDC from 5% in 2022 to 23% in Q1 2025 [2][20][25] Coinbase's Business Performance - Coinbase maintains a market share of 6%-7% in the cryptocurrency exchange sector, with a highly compliant business model that facilitated its status as the first publicly listed digital asset exchange in the U.S. [3][35] - In 2024, Coinbase's trading commission revenue is expected to reach $3.986 billion, a 262% year-over-year increase, while subscription and service revenue is projected at $2.307 billion, a 164% increase. Retail customers contribute over 90% of trading revenue, with stablecoin revenue accounting for 15% of total income [3][4][35] Financial Projections for Circle - The stablecoin market is projected to grow significantly, with a neutral assumption of a 50% CAGR, estimating a market size of approximately $1.1 trillion by 2028 and $2.5 trillion by 2030 [4][26][29] - Circle's revenue is closely tied to the market capitalization of USDC and Federal Reserve interest rates, with total revenue expected to reach $1.676 billion in 2024 and $2.58 billion in 2025 [4][28] Expanding Use Cases for Stablecoins - The application of stablecoins is rapidly expanding beyond cryptocurrency trading to include cross-border payments, foreign exchange savings, and decentralized finance (DeFi) [5][29] - For instance, USDC offers an annualized interest rate of 3.68% on the Ethereum-based Compound lending platform, showcasing its advantages in the DeFi space compared to other assets [5][32]

Group 1 - Circle's stock price fell by 15% due to increased competition risks in the digital token space, after a significant rise driven by optimism around stablecoin regulation and adoption [1] - The US Senate passed the GENIUS Act, which aims to establish a federal framework for digital tokens backed by assets like the US dollar, contributing to Circle's previous stock surge [1] - Analyst Ed Engel expects Circle to continue benefiting from stablecoin adoption in the short term, but warns that regulatory clarity from the GENIUS Act could intensify competition and pressure Circle's market share by 2025 [1] Group 2 - Circle's primary revenue source is "reserve income," which is interest earned from assets backing its USDC stablecoin, largely from short-term US Treasury securities [2] - Distribution will play a crucial role in future market share growth, especially as more regulated companies launch their own stablecoins; Circle has paid about 60% of its reserve income to distribution partners like Coinbase and Binance [2] - Financial technology company Fiserv plans to launch a digital asset platform, including a new stablecoin FIUSD, leveraging Circle's existing infrastructure, which is seen as a positive development for Circle [2]

Core Insights - Circle Internet Group Inc. (NYSE: CRCL) stock has surged from $120 to around $240, with potential to reach $500 based on non-stablecoin revenue growth [2][3] - The market capitalization at $500 would be approximately $120 billion, raising questions about the justification for such a valuation [3] Revenue Potential - Circle benefits from an interest rate environment above 5% and approximately $60 billion in USDC circulation, with potential to expand to $250 billion in 3-4 years, leading to gross yield revenue of $8 billion annually [4] - After accounting for partner revenue sharing, Circle could net $4-4.5 billion, potentially tripling current levels, supporting an EPS of $2, with a possibility of reaching $4 per share if net margins improve to 20% [4] - Infrastructure revenue could become a dominant driver, with Circle positioning itself as the "Stripe for digital dollars," aiming to capture a significant share of the global enterprise addressable market [7][8] Client Acquisition and Revenue Growth - If Circle secures 15,000-20,000 mid-sized and large clients, it could achieve $3-3.5 billion in recurring infrastructure revenue, with services yielding software-like recurring revenue and higher profit margins [8] - Combined with expected reserve yield, total revenue could reach $8 billion, leading to a net income of approximately $3 billion and an EPS of $12, making a $500 stock value seem justifiable at a 42x P/E ratio [9] Market Dynamics and Risks - Potential risks include a decline in interest rates, which could halve reserve income, and revenue sharing with Coinbase, which may narrow margins [10][11] - Adoption of APIs may be slower than expected, impacting the growth of Circle's infrastructure business [12] - Regulatory risks remain, with inconsistent regulations in blockchain potentially hindering international expansion [13] Conclusion - While the $500 valuation may seem ambitious, Circle's transition from a stablecoin issuer to an infrastructure provider for online finance indicates a strong revenue trajectory, albeit with anticipated volatility in the short term [14]

Group 1: Ark Invest's Actions - Ark Invest sold shares of Circle Internet Group, marking the only sell for its largest ETF, Ark Innovation ETF (ARKK), which has over $5.5 billion in assets [1][2] - The decision to sell comes after Circle's stock surged 83% following the passing of the GENIUS Act, which creates a federal regulatory framework for stablecoins [7] - Despite the sell-off, Circle remains a significant holding for Ark Invest, being the third-largest position across all of Cathie Wood's ETFs [10] Group 2: Circle Internet Group Overview - Circle is a prominent player in the fintech sector, known for its stablecoin, USD Coin (USDC), which aims to maintain a one-to-one peg with the U.S. dollar [3][4] - USDC has achieved a circulation of $60 billion, making it the second-largest stablecoin globally, commanding 25% of the market [5] - Circle turned profitable in 2023, but its top-line growth has slowed to a 16% gain projected for 2024, raising some valuation concerns with a market cap exceeding $50 billion [6] Group 3: Market Context and Future Outlook - The regulatory environment for digital currencies, particularly stablecoins like USDC, is improving, which could enhance their mainstream adoption and integration with traditional banking [7] - Circle's IPO was notable for having over half of the shares offered coming from insiders cashing out at $31 per share [10] - The stock's performance indicates potential for further growth, as it opened the week nearly eight times its IPO price, suggesting strong investor interest [9]

Circle(CRCL.N)涨幅一度扩大至逾15%。 ...